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Will the big miners dump Gillard too?

The three big mining companies are meeting soon to destroy the Minerals Resource Rent Tax, and with it possibly Julia Gillard’s prime ministership.

The MRRT was a deal struck between Gillard and Swan and Xstrata, BHP Billiton and Rio Tinto – a watered down Resource Super Profits tax which applies only to 320 companies instead of 2300 and which will see the 3 companies pay one or two percent extra tax.

The Labor Right destroyed Kevin Rudd as PM at the bidding of the unelected mining magnates to get rid of the RSPT and replace it with this sellout tax.

So why are the big mining companies complaining? Under the agreement the Commonwealth will give a credit for state royalties the mining companies pay.

What the agreement didn’t make clear was that the Commonwealth wasn’t going to give the green light to States and Territories to raise royalties and for the miners to recoup the increase from the Commonwealth.

So the Labor Government has said they won’t give tax credits for any royalty increases after the date of the agreement.

The big miners don’t like this. It might mean they actually have to pay more than the predicted one or two percent. This is evidently a very bad thing.

It isn’t really because in bourgeois economic theory resource rents can be taxed almost to 100 percent without any impact on activity.

So the miners are meeting to plot their next steps. Labor is not going to dump Gillard. But Labor is a minority Government. A concerted campaign by the miners might be in the offing to have Tony Abbott take over.

The mining companies might destabilise the economy with threats to investment and jobs. They could mount another disinformation campaign spreading fear among mining workers and others. And they might launch a capital strike.

What could Labor do in response? Let’s suspend reality for a moment and imagine that they actually are a social democratic party whose aim is to make life better for working people. I know, it’s pretty hard to imagine, but bear with me.

Why not nationalise the mines under workers’ control?

Support for nationalisation comes from an unlikely quarter – Ken Henry himself. His Tax Review says that governments have a range of options for obtaining a return from resource exploitation. Apart from a resource rent tax one of those options is public ownership. The report says:

Public production allows the government to control exploration and production expenditure, but may lower the return to the community if public enterprise is less efficient at resource exploration and production due to a lack of expertise and market discipline.

The efficiency argument can be easily answered. Put the mine workers in charge of the mines. Let’s decide democratically what is to be done.

And as we progress, production under workers’ control becomes production to satisfy human need and moves away for the old crisis ridden alienating cut throat anti-human production for profit.

It isn’t going to happen. Instead Labor will kowtow to the real rulers of Australia – the boses – and come up with some compromise like recognising ‘appropriate and justifiable’ increases that lets the big miners off the tax hook again.

If there is one hallmark of Gillard’s Labor Party government it is giving in to capitalists every time they complain.